With less than a month left for the rollout of the GST, the Indian Banks’ Association (IBA) has informed a Parliamentary panel that lenders are not yet geared up for implementation of the new indirect tax regime. “Since the GST will be operational from July 1, 2017, banks have to make a lot of changes in their systems and other procedures. The preparedness of all banks for implementation of GST on July 1, 2017, is a question mark,” the IBA has conveyed to the Parliamentary Standing Committee on Finance.
The IBA further said that several services by banks to customers are centralised while several others are localised. Banks will have to make changes in the existing infrastructure which would be a huge challenge for the banks. The IBA had taken up the case for central registration, the association added.
Touted as the biggest taxation reform since independence, the GST will subsume central excise, service tax, VAT and other local levies to create a uniform market.
The new indirect sales tax is expected to boost the GDP growth by about 2 percentage points and check tax evasion. The powerful GST Council, comprising a representative of Centre and States, has recommended a four-tier tax structure — 5, 12, 18 and 28 percent for goods and services.
On top of the highest slab, a cess will be imposed on luxury and demerit goods to compensate the states for revenue loss in the first five years of GST implementation. All the states have agreed for the roll out of the new indirect tax regime from July 1.